We’re all well aware of the current UK energy crisis, and the headlines have been full of how this impacts UK households. Flying under the radar is how this all impacts businesses and how they are dealing with the crisis.
It’s not surprising to hear that small businesses are being hit the hardest, and even some larger businesses operating in certain industries. With 95% of the UK’s businesses being classed as small or micro businesses, it has never been more important to support the businesses community alongside struggling households.
First up, we’ll look at things that can be done to help lower commercial energy bills and then dive a bit deeper into why the energy crisis is so bad and when we are likely to be seeing the end of the challenges.
The Big Energy Price Freeze - Business Edition
Liz Truss, the new Prime Minister of the UK, has extended the price cap price freeze to small businesses. This is a huge help to already struggling businesses as prices are set to increase 80% in the last quarter of 2022, and there has previously been no cap on any commercial energy prices.
What Can Businesses Do This Winter To Lower Energy Bills
Whilst the energy market is complicated at the moment, businesses can switch energy tariffs as there is no price cap for protection. This has a lot of downsides but it also means the market remains competitive.
Many business owners are switching their commercial energy now to avoid the threat of further price increases later in 2022 and into 2023. Whilst there are no guarantees, 1 and 2-year fixed energy tariffs seem to be popular - even if the price per kWh is much higher than previous fixed-rate tariffs.
You can compare the latest business energy price here.
Reduce Business Energy Consumption
First up, and probably the most obvious is to reduce the amount of gas and electricity being used. A simple self-assessment business energy audit will uncover easy opportunities to reduce any energy waste. Some things to consider are:
- Furniture/ objects covering radiators
- Doors open/ gaps causing heat loss
- Heating system timers/ smart thermostats
- Turning equipment off when not in use
- Installing LED lighting/ motion sensors
- Ensuring you’re on the right tariff
These are just small samples of actions that can be taken to reduce commercial energy bills. A more extensive business energy audit can uncover much more to help reduce overall consumption.
Finding Business Energy Grants And Schemes
Lowing energy consumption not only offers cheaper energy bills but also could mean that you qualify for an energy efficiency grant.
Some government schemes offer loans, grants or subsidised energy-saving measures to support small businesses by reducing their environmental impact. The Government typically look for:
- Efficient production processes
- Investment in energy-efficient equipment
- Efficient waste management
- Initiatives favourable to reducing carbon footprints
Where Else Can I Save Business Expenses?
In this section, we’re looking at more short-term savings you can make without impacting largely on your day-to-day business. Financial discipline over the next 12 months may play a huge part in your company’s success in navigating the energy crisis.
Review Software Subscriptions
Many businesses have subscriptions to several premium services with auto-renew switched on. Making a list and cutting anything that is not essential to the operation and success of your business can help make huge annual savings for your business.
Can You Benefit From Any Tax Refliefs?
There is a wide range of small business tax reliefs available. If you’re regularly involved in any sort of research and development, you can claim tax relief.
You can deduct the costs of running your business from the profits before tax when it comes to your annual preparation of accounts. There are lots of tax relief schemes available, and a list can be found here.
Capital allowances are one of the most popular and if you purchase assets that you keep to use in your business, such as equipment, machinery or business vehicles, you may be eligible.
Review Other Business Utilities
Switching your essential business services to cheaper suppliers can help you stack up smaller savings that can make a difference. Business owners are being savvy and comparing prices for multiple other business utilities including:
- Business Water - the water market was deregulated in 2017 allowing businesses in Wales and England to switch water suppliers and fix their rates for up to 3 years. You can compare business water rates with our partners here.
- Business Connectivity - being connected to your customers does not need to come at a premium. You can compare calls & lines, business broadband and VoIP packages here.
- Waste Collection - Business waste could be anything from general office waste, trade or builders waste, right through to hazardous waste. Any waste that comes from any commercial activity no matter the size of the business is considered business waste.
What Challenges Are Businesses Facing In 2022?
Wholesale energy prices are surging and are placing pressure on energy suppliers. This is the result of a long–list of factors that include colder European winters that have increased demand, the powerline from France to the UK has been closed down due to being damaged, the UK lacking adequate gas storage and the Russian invasion of Ukraine to name a few.
The problems haven’t just impacted the cost of energy, with many companies experiencing increased costs from materials and suffering from supply chain issues. The costs of the energy crisis, Brexit and COVID-19 have created a perfect storm of challenges to many sectors but have hit the following more so than the rest: